New members • Members Finance - Assurance - Banque
Welcome to our new member: Coface
Coface is a leading provider of credit insurance and risk management solutions, protecting businesses worldwide for decades.
Introducing Coface: Empowering Businesses to trade safely with Credit Insurance
In an interconnected global economy where risks abound, safeguarding New Zealand businesses against financial uncertainties is paramount. Enter Coface, a leading provider of credit insurance and risk management solutions that has been a cornerstone part of protecting businesses worldwide for decades.
Understanding Coface
Founded in 1946 in France and drawing upon over 75 years of expertise, Coface stands as a frontrunner in Trade Credit Insurance & risk management, offering a wide array of complementary services, such as Debt Collection, Factoring, Bonding, and Business Information Services designed to support businesses of all sizes across various industries.
Coface’s experts work to the beat of the global economy, helping ~50,000 clients in 100 countries build successful, growing, and dynamic businesses. With Coface’s insight and advice, these companies can make informed decisions. The Group' solutions strengthen clients ability to sell by providing them with reliable information on their commercial partners and protecting them against non-payment risks, both domestically and for export. In 2023, Coface employed ~4,970 people and registered a turnover of €1.87 billion.
What is Credit Insurance?
At its core, the credit insurance provided by Coface shields businesses from potential losses due to unpaid invoices resulting from insolvency or default by customers. This proactive approach helps businesses secure their cash flow and maintain financial stability, even in challenging economic climates.
We interviewed Coface Commercial Director David Meys, who details that “40 percent of a typical company’s assets are in the form of its outstanding sales ledger – credit risk often being the company’s largest and most likely to blow an organisation up.
This cornerstone of any business is often undertaken by untrained staff, who have risen through the ranks, to inherit dysfunctional credit processes. They are often unaware of the true risks they are running. Trade credit insurance helps companies to operate through unpredictable economic cycles by protecting accounts receivable from losses caused by the insolvency, protracted default or political events. Cover is sought on a buyer, assessed by an insurer (who typically has financials), then underwritten, meaning a company can then increase trade with confidence and obtain bank funding based on these deals now being securitised. Credit insurance is very cost effective at around just $250 per $100,000 of turnover insured. It plugs the hole of throwing good money after bad by covering not only the cost of bad debts, but also the collection and legal costs of recovery, (which can often end up being higher than the original overdue amount), plus any preference payment demands under the insured limit.
Structured according to your specific requirements, it can be designed for domestic sales or export sales, to help protect against unexpected bad debts, preserve cash flow and protect profitability”.
Trade credit insurance is for companies that:
• Conduct business on open credit terms
• Want their enterprise risk management philosophy to be applied to financial management
• Have accounts receivable concentrations
• Seek asset-based lending arrangements with banks
• May not collect sufficient credit information on their own customers and value a credit partner to access credit risk
By purchasing credit insurance, your organisation may be able to:
• Increase sales by offering buyers more competitive payment terms
• Confidently sell to new customers in a variety of regions
• Release bad debt reserves for either reinvestment or as a dividend to shareholders
• Companies may also improve their financing arrangements with banks by increasing advance rates, improving pricing, or obtain other structural benefits to existing financing arrangements.
Coface maintains extensive databases of companies worldwide, including information on balance sheet strength, sales histories, payment records, and financial ratios.
David says “A trade credit insurance policy can help you gain access to this data to support your sales expansion. Taking the time to question your company’s credit management practices could be the thing that makes all the difference to the bottom line. Making informed decisions, based on a cost-benefit analysis of transferring credit risks to an insurer where appropriate, is prudent and something the board should be doing each year”.
